The medical diagnostics industry has seen a wave of M&A activity in the past year, and this trend looks set to continue. This recent activity has highlighted the intense pressure on the companies competing to remain the big players in the industry. The latest of several high-profile acquisitions was the US$7 B purchase of Dade Behring Holdings by Siemens Medical Solutions USA. This acquisition will give the new combined company total sales of over US$4.2 B: US$1.7 B from Dade and US$2.5 B from Siemens (based on 2006 figures). Siemens will therefore become the second largest company in the diagnostics industry, leap-frogging Abbott Laboratories, which had sales of US$4 B in 2006, but remaining behind Roche, whose Diagnostics Division made sales of US$ 7.2 B in 2006. This article discusses the rationale of the acquisition, and the high price paid in relation both to Dade#8217;s turnaround from its Chapter 11 bankruptcy in 2002 and the current active state of the diagnostics acquisition market. It also sets the deal in the context of others made recently in the diagnostics industry, and discusses the likelihood of future diagnostics acquisitions.